"He is a developer who wants to make profit and the town will benefit."
Who's to say the town would benefit? In all probability more than one home would have to be taken (you've just taken away someones home.) Consider the strain on municipal services, ie., water, sewer, electric, roads. A small "hotel" simply can't generate the revenues necessary to compensate for the strain on a small community. Perhaps a better idea would be to have the locals submit a plan to acquire the property to use as a city park or historical home. An appropriate plaque explaining how the property was obtained would be in order.
Read "Atlas Shrugged" by Ayn Rand. It may give you a better understanding.